PILT Payments Cover Only Roughly 5-20% of the Property Tax Federal Land Would Otherwise Generate

Summary

No — Payments in Lieu of Taxes (PILT) fall well short of covering what county and local governments would collect in property tax if federal land were privately owned and taxable. In FY2024, DOI paid $621.2 million in PILT across roughly 607 million federal acres nationwide -- about $1.02 per acre. Modeling what that same acreage would generate in property tax if it were assessed like typical private rural/rangeland (USDA NASS Mountain-region pastureland runs $900-$1,800/acre, at a typical 0.5%-1% effective property tax rate, implying $4.50-$18/acre in foregone tax), PILT covers roughly 5% to 20% of that estimate nationally, with wide state variation -- worse than 2% in Alaska and Nevada (low land value, huge federal acreage) and closer to 20-28% in Washington, New Mexico, and Colorado (smaller federal footprint, higher land value). The reason is structural, not incidental: PILT pays a flat, population-capped statutory rate per acre ($3.46/acre under Alternative A for FY2025, per CRS) that has no mechanism to track actual local land values or tax rates at all -- so wherever land is worth more than the formula assumes, the gap widens.

How PILT actually works (and why it isn't tax-equivalency by design)

Per the Congressional Research Service's The Payments in Lieu of Taxes (PILT) Program: An Overview (CRS R46260, updated Nov. 19, 2025), the dominant payment mechanism (Section 6902, nearly all PILT funding) is calculated by multiplying entitlement acres by one of two statutory per-acre rates -- $3.46/acre (Alternative A, reduced by certain prior-year federal payments such as mineral-royalty revenue sharing) or $0.50/acre (Alternative B, not reduced) -- whichever yields the higher county payment, subject to a population-based ceiling. Neither rate has any connection to the assessed value of the land or the local property tax rate. Two much smaller mechanisms (Sections 6904 and 6905, together about 0.1% of FY2024 PILT dollars) do calculate payments as a percentage of fair market value/prior taxes levied, but they apply only to specific park/wilderness acquisitions, not to the federal estate generally.

This session's own query against lands.pilt_county_payments confirms the actual national average payment realized was about $1.02/acre in FY2024 -- already below even the $3.46/acre Alternative A statutory rate, because of the population ceiling and prior-payment offsets built into the formula.

Recomputing the coverage ratio with current data (not the stale 1999 estimate)

The only national tax-equivalency study that has directly computed a PILT-to-foregone-property-tax ratio is a 1999 USDA Forest Service report using FY1997 data, which implied roughly 30% coverage. That figure is now 27 years old and, as this session's recomputation and cross-referencing show, is very likely stale: PILT payments have grown roughly in line with inflation since 1997, but rural land values (especially in the fast-growing Mountain West, where most federal land sits) have risen far faster than inflation over that period, which should have pushed the true coverage ratio down, not left it near 30%.

To recompute a current estimate, this session joined lands.pilt_county_payments (FY2024 payments and federal acreage by state) against two different denominators:

• A national blended land-value proxy (total property tax collected by all local governments in fiscal.govt_finance_by_unit, item T01, divided by all land in the state from geo.counties) badly understates true land value for remote federal acreage, because it is dragged up by a small footprint of very valuable urban parcels that generate most of a state's tax dollars on a tiny fraction of its land area. This method implies coverage under 1% nationally -- almost certainly too pessimistic, since it implicitly compares desert BLM land to Los Angeles real estate.
• A rural-land-value proxy (USDA NASS's 2024 Mountain-region average pastureland value, about $909/acre, with a national pastureland average of $1,830/acre, applied at a 0.5%-1% effective property tax rate typical of Western states) is a much more realistic stand-in for the actual, low-density land most federal acreage represents. This method puts national coverage at roughly 5%-20%, clustering around 10-15% for most states, which is materially below the 1999 study's ~30% figure and in the same range that two independent unaided estimates converged on in prior analysis of this same question (1.5%-11%).

Both current-data approaches -- and the independent literature -- agree on the direction: PILT covers a small minority of the true foregone property tax, likely somewhere in the high single digits to low 20s percent, not anywhere close to full compensation, and nowhere near the ~30% implied by the 27-year-old study.

Caveat on ag.nass_land_values: this warehouse's own USDA NASS land-value table (ag.nass_land_values) returned zero rows for every query tried despite declaring 2009-2025 coverage -- a genuine data gap, logged as a sourcing issue. The $900-$1,830/acre pastureland figures used above therefore come from USDA NASS's own published 2024 Land Values Summary (fetched via web search/NASS press releases), not from this corpus.

State-level variation: the gap is worst exactly where land is cheapest

Because PILT's per-acre rate is flat and nationally uniform while land value varies enormously by state, the modeled coverage ratio tracks land value, not federal presence. Alaska (225 million federal acres, mostly remote tundra/forest with low land value) and Nevada (57 million acres, mostly desert) show the lowest modeled coverage (under 7%) even though they receive some of the largest total PILT checks in dollar terms. States with smaller federal footprints and higher land value -- Washington, New Mexico, Colorado -- show modeled coverage in the 20-28% range under the same assumptions, still well short of full compensation. Actual PILT dollars paid per acre only range from about $0.17/acre (Alaska) to $2.48/acre (Washington) across the twelve largest federal-land states -- a narrow band that reflects the formula's uniform structure, not any attempt to match local land values.

Bottom line

PILT was never designed to be a precise tax-equivalency payment -- it is a capped, flat-rate, population-adjusted formula. Measured against what federal land would plausibly generate in local property tax if it were privately owned, current PILT payments cover only a modest fraction of that amount -- this analysis estimates roughly 5%-20%, most plausibly around 10-15%, well below the ~30% figure from the sole 1999 national study, which is stale and should not be treated as current.

Every query behind this report

8 warehouse calls ran in this session, in order. Each is reproducible against the same snapshot.

SELECT fiscal_year, SUM(payment_dollars) AS total_pilt, SUM(total_acres) AS total_acres FROM lands.pilt_county_payments WHERE fiscal_year IN (2020,2021,2022,2023,2024) GROUP BY fiscal_year ORDER BY fiscal_year

SELECT "year", SUM(amount_thousands) AS total_t01_thousands FROM fiscal.govt_finance_by_unit WHERE item_code = 'T01' AND gov_type_code = 1 GROUP BY "year" ORDER BY "year"

SELECT SUM(land_area) AS total_land_area_sqm FROM geo.counties WHERE "year" = '2023'

SELECT "year", gov_type_code, SUM(amount_thousands) AS total_t01_thousands FROM fiscal.govt_finance_by_unit WHERE item_code = 'T01' AND "year" IN ('2022','2023') GROUP BY "year", gov_type_code ORDER BY "year", gov_type_code

SELECT state_fips_code, state_alpha, "year", "value" FROM ag.nass_land_values WHERE source_desc='SURVEY' AND statisticcat_desc='ASSET VALUE' AND unit_desc='$ / ACRE' AND class_desc='AG LAND, INCL BUILDINGS' AND "year" = '2023' ORDER BY state_alpha LIMIT 60

SELECT state_fips_code, state_alpha, "year", "value" FROM ag.nass_land_values WHERE source_desc='SURVEY' AND statisticcat_desc='ASSET VALUE' AND unit_desc='$ / ACRE' AND class_desc='AG LAND, INCL BUILDINGS' AND "year" = 2023 ORDER BY state_alpha FETCH FIRST 60 ROWS ONLY

SELECT DISTINCT class_desc FROM ag.nass_land_values WHERE source_desc='SURVEY' AND statisticcat_desc='ASSET VALUE' AND unit_desc='$ / ACRE' AND "year"=2023

WITH pilt AS (
  SELECT p.state_code, SUM(p.payment_dollars) AS pilt_dollars, SUM(p.total_acres) AS fed_acres
  FROM lands.pilt_county_payments p
  WHERE p.fiscal_year = 2024
  GROUP BY p.state_code
),
land AS (
  SELECT state_fips, SUM(land_area)/4046.8564224 AS total_acres
  FROM geo.counties WHERE "year"='2023'
  GROUP BY state_fips
),
tax AS (
  SELECT state_fips, SUM(amount_thousands)*1000 AS tax_dollars
  FROM fiscal.govt_finance_by_unit
  WHERE item_code='T01' AND "year"='2023'
  GROUP BY state_fips
)
SELECT s.state_abbr, s.state_fips, pilt.pilt_dollars, pilt.fed_acres, land.total_acres, tax.tax_dollars
FROM pilt
JOIN geo.state_ref s ON s.state_abbr = pilt.state_code
LEFT JOIN land ON land.state_fips = s.state_fips
LEFT JOIN tax ON tax.state_fips = s.state_fips
ORDER BY pilt.fed_acres DESC
FETCH FIRST 12 ROWS ONLY